Google and the China Challenge

Google's(GOOG) censorship struggle with Beijing crystallizes the challenge China poses to American global leadership.

Until the Google imbroglio, we heard much about China's undervalued currency and subsidized exports, rough treatment of foreign investors and purchases of U.S. debt, but not enough about Beijing's restrictions on unfettered access to information, expression and self-determination.

Americans believe individuals, free to think, speak and chart their own lives, best guide the progress of nations. Governments draw legitimacy from collective approval, because the people, collectively, are sovereign.

Democracy and markets are as essential to what is America as words and paper are to books. Our political and economic institutions organize competition among individual ideas and enterprise that define our civic and material lives.

Democracy and markets are mutually reinforcing. Markets work best when personal freedoms are protected. Democracy best safeguards those freedoms.

Championing these values, the U.S. has worked tirelessly with allies in Europe and elsewhere to create international institutions that protect human rights and foster free markets.

China is not a democratic nation as, for example, Japan and Taiwan have become, nor is it in transition to becoming one.

China has an authoritarian government with no plans or timetable for relinquishing power. By word and deed, the Communist Party assumes parental authority over Chinese citizens, and asserts sovereignty without their consent.

China embraces market reforms only as necessary and seeks to participate in global markets only on its own terms.

China accomplishes rapid growth by exploiting its working class and by appropriating other people's technology. It openly embraces as a development strategy a hugely undervalued currency that imposes unemployment on Western nations and keeps living standards of ordinary Chinese workers artificially low. China's prosperous middle class is built on the backs of factory labor paid less than the value it creates.

For foreign companies to sell in China, Beijing requires them to produce in China through joint ventures and then transfer prized technologies to local partners. Now, having extracted the know-how it needs, China is tightening the noose on foreign companies, causing them to consider withdrawing and leaving behind formidable new competitors.